New Chinese hope for Rover

PRODUCTION at Longbridge could be back on after Chinese motor giant Shanghai Automotive Industry Corporation said it had signed an agreement to support a takeover bid for MG Rover and its enginemaking sister firm Powertrain.

SAIC had hastened the demise of Rover in April when it pulled a deal to rescue the heavily-lossmaking Birmingham carmaker.

Rover was later put into administration at the cost of more than 6000 jobs.

Today, in what insiders said was a 'highly significant' announcement, SAIC said it had signed a letter of intent with Martin Leach, the former head of Ford Europe, to bid for Rover.

SAIC refused to comment on its plans but reports suggest it would concentrate on the more successful Rover 75 saloon and sports car divisions with the potential for developing new models.

In a statement, SAIC said it had agreed a 'strategic collaboration' with Magma, a bid vehicle put together by Leach and former General Motors executive Edward Sabisky.

The statement said: 'Magma intends to acquire all of the assets of MG Rover Group and Powertrain. In addition, Magma intends to form a new company to recommence production at Longbridge. SAIC will support Magma's development plans.'

Administrators from PricewaterhouseCoopers will now have to weigh up the merits of the SAIC/Leach bid against a potential counter offer from Chinese rival Nanjing Automotive.